March was another strong month for the Exchequer, with receipts for the month over 17% ahead of March 2022.
Very positively, after some concern in February, income tax figures for March were almost 10% ahead of last year. So far, the loss of highly paid roles in the technology sector is not impacting negatively on income tax returns. However, we may see the impact of these job losses as the year progresses.
On the consumer spending side, VAT figures for March were strong, almost 10% ahead of March 2022. The VAT figures are surprising in the context of higher interest rates in particular and the resultant negative impact on discretionary spending power. Historically high savings level, as well as price inflation, may help explain the figures.
Corporation tax receipts continue to impress, already almost €1.3bn ahead of 2022 year to date. However, any drop in corporate earnings in 2023, particularly in the technology sector, could see this surplus eroded later in the year. June will be a key month in this regard – corporate tax receipts in June will provide a good indicator of full year returns.
So far, corporate tax returns have performed remarkably well. The increase in our effective tax rate for large groups to 15% in 2024 may see this trend continue, although we remain very exposed to the global economic climate.
In summary, a strong first quarter for the Exchequer, with receipts running €2.5bn ahead of 2022.
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